Since the 1980's industrial buying has gone from getting three quotes and executing a three-part carbon paper Purchase Order typed on an IBM Selectric typewriter, to a sophisticated electronic environment where information is available at the buyer's computer command.  With the introduction of ERP systems buyers can now assemble historical buy information, supplier history and performance, develop RFPs, RFQs and enable reverse auctions.  Electronically, buyers can exchange offers with suppliers and transmit Purchase Orders via EDI.  Procurement is now taught at the undergraduate and graduate levels as part of Supply Chain Management programs at universities around the world.  Students emerging from graduate programs are more strategic thinkers and have a much broader understanding of business as ecosystems.

Am I the only one who is mystified by this? There are three days left to go in an auction on ebay…3 people have been outbidding one another for the last two days in an attempt to "win." The only one winning is the seller as the price goes up and up. Is there any reason why we wouldn't wait until 5 minutes, or as I do, 1 minute left to go in the auction? There is a zero percent chance someone will "win" bidding one, two or three days in advance, yet that whole model is predicated on people acting irrationally.

If you think this doesn't happen in B2B negotiations, have you ever been part of a reverse auction or watched competitive bidding drive down pricing and give away free service until there is no margin left in the deal for the "winner?"

Despite the abundance of consulting, investments, training methodologies, and hype that focus on value - mining value, value statements, value selling, etc., - most of today's "tried and true" approaches fall short of helping B2B companies achieve a high level of competence at leveraging differentiated value for price premiums and risk reductions.  This is not surprising for two reasons:

I'd like to invite you to a fancy restaurant tonight.  But this is not just any fancy restaurant.  It is the type of restaurant you read about in the tabloids because celebrities are always there.  It's the kind of place you normally have to book at least six months in advance.  It's the kind of place with three-hour waits and long lines at the valet stand as the paparazzi peer around to look at someone famous inside.  Now, this restaurant doesn't have a fancy name, but I'm sure you'll recognize it.  It's called the Fixed Price Negotiation.

Just how can companies develop and implement strategies that are responsive to today's business negotiation environment, where sellers are facing more complex negotiations, more professional buyers, more irrational competitive behavior, and more internal negotiation?  All of which are making negotiating even more difficult!

If we know where and what most of the traps are in business negotiation, and we know they are fear driven, why do we keep reacting in the same way?  There are two key tactics used by 97% of buyers - mention an alternative and leverage it to start the bargaining.  This then creates three key problems:  commoditiztion pressure, price pressure and selling "value" and then falling back to negotiating price.  Value is a word we hear a lot these days.  It's supposed to denote something worthwhile, significant, tangible and durable.

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I recently read an article that talked about how a team member, during the beginning of a deal had "expressed need – the death-rattle of any negotiation." I see two problems with this quick assessment. First of all, it unequivocally highlights the value of having internal alignment when negotiating a deal. Does every team member understand what the negotiation strategy is, its details, what tactics to use and expect in return? Before you can adequately execute a negotiation strategy, internal alignment on the deals' objectives, elements and ranges is a key success factor. Clearly understanding your alternatives, as well as your opponent's alternatives, allows you to put things in perspective and develop gainful communications during the negotiation process.

Some of our recent research shows some interesting and significantly differing responses from C-suite executives and street-level sales professionals.